International Journal of Commerce and Management Research

International Journal of Commerce and Management Research

ISSN: 2455-1627, Impact Factor: RJIF 5.22
www.managejournal.com
Volume 2; Issue 11; November 2016; Page No. 38-40

Performance of banking sector in India: A comparative study of selected bank

Rakesh Kumar
Assistant Professor, PG Department of Commerce, SGGS Khalsa College, Mahilpur, Punjab, India

Abstract
Bank play important role in economic development of a country. In the present era, due to globalization many reforms takes place
which also effect on banking sector. Banking sector also witnessed tremendous changes in the present time. These changes also
affect the performance of banks in India. After Liberalization Indian Banking sector develops rapidly. Many private players and
foreign institutions also enter the Indian banking sector which also creates competition among them. The present paper attempts to
know the performance of Public, Private & Foreign Banks in India by taking one bank from each sector.

Keywords: banking, Indian Banking industry, CITI Bank, State Bank of India, HDFC Bank

1. Introduction services company headquartered in Mumbai, Maharashtra.

The Indian Banking industry, which is governed by the HDFC bank commenced operations as a Scheduled
Banking Regulation Act of India, 1949 can be broadly Commercial Banks in January, 1995. The bank has over
classified into two major categories, non-scheduled banks and 3200 branches, 12000+ ATM’s. The assets managed by this
scheduled banks. Scheduled banks comprise commercial banks bank are valued at 66.7 billion USD. It has about 76,286
and the co-operative banks. In terms of ownership, commercial employees including 12,680 women and has a presence in
banks can be further grouped into nationalized banks, the State Bahrain, Hong Kong and Dubai. HDFC Bank is the second
Bank of India and its group banks, regional rural banks and largest private bank in India in terms of assets. It is the
private sector banks (the old/ new domestic and foreign). largest bank in India by market capitalization as of
The first phase of financial reforms resulted in the February 2016
nationalization of 14 major banks in 1969 and resulted in a shift  CITI Bank: CITI Bank has a long history in India.
from Class banking to Mass banking. This in turn resulted in a Currently, the owner of Citibank India, Citigroup is the
significant growth in the geographical coverage of banks. largest foreign direct investor in financial services in India
Every bank had to earmark a minimum percentage of their loan with a total capital investment of approximately US$4
portfolio to sectors identified as “priority sectors”. The Billion in its onshore banking and financial services
manufacturing sector also grew during the 1970s in protected business and its principal and alternate investment
environs and the banking sector was a critical source. The next programmes. It operates 44 full-service Citibank branches
wave of reforms saw the nationalization of 6 more commercial in 31 cities and over 700 ATMs across the country.
banks in 1980. Since then the number of scheduled commercial Citibank is an employer of about 7,500 people.
banks increased four-fold and the number of bank branches
increased eight-fold. 3. Review of Literature
Several research have been conducted to analyses the different
2. Profile of Banks Selected for Study aspects of performance of commercial banks in India and
 State Bank of India is an Indian multinational government abroad. Some of the review concerned with the topic discussed
owned public sector banking and financial in below
services company. Its headquarters in Mumbai. SBI is the Singla HK (2008), in his paper,’ financial performance of
leading bank in India when it comes to number of branches, banks in India,’ in ICFAI Journal of Bank Management No 7,
ATM’s, net profits, total assets managed, etc. With an has examined that how financial management plays a crucial
employee base of close to 3 lakh people SBI commands role in the growth of banking. It is concerned with examining
20% (approx) of the Indian banking sector. The bank has the profitability position of the selected sixteen banks of banker
over 17,000 branches including 191 foreign offices spread index for a period of six years (2001-06). The study reveals that
across 36 countries, making it the largest banking and the profitability position was reasonable during the period of
financial services company in India by assets and with more study when compared with the previous years. Strong capital
than 27,000 ATM’s. The bank manages assets worth more position and balance sheet place, Banks in better position to
than 390 billion USD. In 2001, the SBI Life Insurance deal with and absorb the economic constant over a period of
Company was started by the bank. They are the only bank time.
that have been permitted 74% stake in the insurance Kajal Chaudhary and Monika Sharma (2011) [4] in her paper
business. SBI also introduced ‘SBI e-tax’ an online tax titled, “Performance of Indian Public Sector Banks and Private
payments facility for direct and indirect tax payments. Sector Banks: A Comparative Study” concludes that an
 HDFC Bank: HDFC Bank Limited (Housing Development efficient management information system should be
Finance Corporation) is an Indian banking and financial developed. The bank staff involved in sanctioning the advances
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should be trained about the proper documentation and charge Table 1 indicates that over the last three financial years of study
of securities and motivated to take measures in preventing the average of Credit Deposit Ratio in SBI was higher than in
advances turning into NPA. Public banks must pay attention on HDFC and Citi Bank. In case of SBI the credit deposit ratio
their functioning to compete private banks. Banks should be was highest in 2013-14 and lowest in 2014-15. But in case of
well versed in proper selection of borrower/project and in HDFC credit deposit ratio was highest in 2013-14 and lowest
analyzing the financial statement in2012-13. In Citi Bank the ratio is highest in 2012-13 and
Virendar Koundal (2012) [5] in his paper titled ‘Performance of lowest in 2014-15.This shows that SBI has created more loan
Indian Banks in Indian Financial System concludes that assets from its deposits as compared to HDFC and Citi Bank.
concludes that although various reforms have produced
favorable effects on commercial banks in India and because of Total Income
this transformation is taking place almost in all categories of The total income indicates the rupee value of the income
the banks. It has also realized that the profitability of the public earned during a period. The higher value of total income
sector banks appears to have started improving but despite this, represents the efficiency and good performance.
the foreign and private sector banks take a big share of cake.
Our public sector banks are still lagging behind regarding the Table 2: Growth of Total Income of SBI, HDFC and CITI Bank (in
various financial parameters in comparison with other banks. Crores)
It is also true that presently, they are facing many internal and Year SBI HDFC CITI BANK
external challenges, which are hindering their performance.
2012-13 1,35,692 41,918 10,913
Hence, there is a need to consider the above listed challenges
2013-14 1,54,904 49,058 12,199
for another reform to improve the performance of the banks
particularly of public sector banks to meet the requirement of 2014-15 1,74,973 57,466 13,490
new and open competitive environment. Source: Annual Reports of SBI, HDFC & CITI Bank from 2012-13
Anurag B. Singh, Priyanka Tandon (2012) [6] in their paper to 2014-15
titled ‘A Study of financial Performance-Comparative
Analysis of SBI and ICICI Bank concludes that SBI is Table 2 depicts the total income of different banks selected for
performing well and financially sound than ICICI Bank but in study in last three financial years. The total income of SBI
context of deposits and expenditure ICICI bank has better HDFC and CITI Bank increasingly every year which shows
managing efficiency than SBI. good performance. But the percentage increase in total income
is higher in HDFC as compare to other banks. So under this
4. Objective of the study indicator private sector maintains the lead.
1. To study the financial performance of SBI, HDFC& CITI
Bank Total Expenditure
2. To compare the financial performance of SBI, HDFC & The total expenditure reveals the proportionate share of total
CITI Bank expenditure spent on the development of staff, interest
expended and other overheads.
Period of Study
Table 3: Growth of total Expenditure of SBI, HDFC and CITI Bank
The study analyses the data of banks selected from 2012-13 to
(in Crores)
2014-15.
Year SBI HDFC CITI BANK
Parameters Studied for Comparison of Performance 2012-13 1,04,610 30,490 6,633
1. Credit Deposit Ratio 2013-14 1,22,794 34,695 6,595
2. Total Income 2014-15 1,36,059 40,062 7,509
3. Total Expenditure Source: Annual Reports of SBI, HDFC & CITI Bank from 2012-13
4. Net Profit to 2014-15

Data Analysis and Interpretation Table 3 shows that the total expenditure of banks selected for
Credit Deposit Ratio study increased in every sector of banks. In case of SBI the
Credit-Deposit Ratio is the proportion of loan-assets created by expenditure is increased 17.38% in 2013-14 and 10.80% in
a bank from the deposits received. Credits are the loans and 2014-15. In HDFC Bank in 2013-14 the percentage increase of
advances granted by the bank. In other words it is the amount expenditure is 13.79% and 15.47% in 2014-15. But in case of
lent by the bank to a person or an organization which is
CITI Bank the expenditure is decreasing in 2013-14 but
recovered later on. Interest is charged from the borrower.
increased by 13.86% in 2014-15. So the above data indicates
Deposit is the amount accepted by bank from the savers and
interest is paid to them. that the banks should concentrate to stabilize their expenditure
so that they can achieve higher growth rate target.
Table 1: Credit Deposit Ratio (in Percent)
Net Profit
Year SBI HDFC CITI BANK Net Profit reveals the financial results of the business activity
2012-13 85.17 80.14 78.18
and efficiency of management in operations. It is calculated by
2013-14 86.76 82.49 72.17
2014-15 82.45 81.08 68.49 deducting provisions and contingencies from operating profit.
Source: Annual Reports of SBI, HDFC & CITI Bank from 2012-13
to 2014-15
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Table 4: NET PROFIT of SBI, HDFC & CITI BANK (in crores)
Year SBI ICICI CITI BANK
2012-13 14,105 6,726 2718
2013-14 10,891 8,478 2,893
2014-15 13,102 10,216 3,422
Source: Annual Reports of SBI, HDFC & CITI Bank from 2012-13
to 2014-15

The table 4 indicates that the net profit of SBI shows decreasing
trends in 2013-14 but afterwards it increase. However, the net
profit was continuously increased in HDFC and CITI bank.
HDFC Bank maintains the lead in their Net Profit as compare
to other banks showing higher operational efficiency as
compare to other banks.

5. Findings and Conclusions

Findings show that during the period of study SBI has created
more loan assets from its deposits as compared to HDFC and
CITI Bank. But the percentage increase in total income is
higher in HDFC as compare to other banks. So under this
indicator private sector maintains the lead. The total
expenditure of all banks increased except in CITI bank for one
financial year i.e. 2013-14.So the banks should concentrate to
stabilize their expenditure so that they can achieve higher
growth rate target. HDFC Bank maintains the lead in their Net
Profit as compare to other banks showing higher operational
efficiency as compare to other banks. According to the
parameters selected for study to judge the performance of
banks, it can be concluded that banks have concentrate on their
performance in the present era. But still private and foreign
sector banks maintain a lead in certain performance indicator.
The public sector banks also perform well and they also expand
their business in every area of a country.

6. References
1. RBI-A Profile of Banks, 2013.
2. Annual Reports of SBI, HDFC Bank and CITI Bank from
2012-13 to 2014-15.
3. IBA database of banks.
4. Kajal Chaudhary and Monika Sharma Performance of
Indian Public Sector Banks and Private Sector Banks: A
Comparative Study International Journal of Innovation,
Management and Technology. 2011, 2-3.
5. Virender Koundal. Performance of Indian Banks in Indian
Financial System International Journal of Social Science
& Interdisciplinary Research. 2012, 1-9.
6. Anurag B. Singh, Priyanka Tandon. A Study of financial
Performance. A Comparative Analysis of SBI and ICICI
Bank, International Journal of Marketing, Financial
Services & Management Research. 2012; 1-11.

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